What is governance?

The ANZSOG Institute for Governance considers the use of the term governance in two main ways. - In its broadest sense, it refers to how a country is run, and specifically to how power within a society is maintained, exercised, delegated and limited. In the context of an organisation or 'corporate' governance, it is the way in which decisions important for the future of organisations are taken, communicated, monitored and assessed. It includes the processes an organisation has for holding managers accountable and measuring performance.

Other recent definitions relating to the governance of organisations include:

• Governance is about ensuring the success of an activity. It encompasses the arrangements by which owners, or their representatives, delegate and limit power to enhance the entity’s prospects for long-term success. Review of the Corporate Governance of Statutory Authorities and Office Holders, J. Uhrig, 2003
• Corporate governance encompasses the arrangements by which the power of those in control of the strategy and direction of an entity is both delegated and limited to enhance prospects for the entity’s long-term success, taking into account risk and the environment in which it is operating. Review of the Corporate Governance of Statutory Authorities and Office Holders, J. Uhrig, 2003
• Good governance is the presence of governance in the most appropriate form. The question of what constitutes good governance is less meaningful than the question of whether or not governance is present and is in the most appropriate form for the organisation. Review of the Corporate Governance of Statutory Authorities and Office Holders, J. Uhrig, 2003
• Public sector governance covers: ‘…the set of responsibilities and practices, policies and procedures, exercised by an agency’s executive, to provide strategic direction, ensure objectives are achieved, manage risks and use resources responsibly and with accountability’ . Implementation of Programme and Policy Initiatives: Making Implementation Matter, Better Practice Guide, Australian National Audit Office and Department of the Prime Minister and Cabinet, 2006
  
• Broadly speaking, ‘corporate governance’ refers to the processes by which organisations are directed, controlled and held to account. It encompasses authority, accountability, stewardship, leadership, direction and control exercised in the organisation. Public Sector Governance, Volumes 1 & 2: Better Practice Guide, Australian National Audit Office, 2003
  
• Corporate governance is the system by which companies are directed and managed. It influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimised. Good corporate governance structures encourage companies to create value (through entrepreneurism, innovation, development and exploration) and provide accountability and control systems commensurate with the risks involved. Principles of Good Corporate Governance and Best Practice  Corporate Governance Council, Australian Stock Exchange, 2003
  
• The OECD takes a broad view of corporate governance and defines it as the full set of relationships among a company’s management, its board, its shareholders and other stakeholders. It provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance determined. OECD Principles of Corporate Governance, Ad-hoc Taskforce on Corporate Governance, OECD, 1999